A container ship grounds, the owner declares general average, and three weeks later an email arrives: the cargo will be released against a signed average bond and an underwriter’s guarantee calculated on a provisional estimate of the contribution. The consignee has a plant standing idle, a customer threatening to cancel, and forty-eight hours to answer. He signs. That moment, long before the adjuster has produced a single figure, is where most of the case is decided.
This page deals with the release of cargo under French law: on what basis the master may hold it, what the French Transport Code means by sufficient security, why an average bond, an underwriter’s guarantee and a cash deposit are three different undertakings, and which reservations are worth putting in writing before signing. It matters to any cargo interest whose goods are discharged in France or whose bill of lading is governed by French law, and to their insurers.
1. The basis of the lien, and its limits
Article L. 5133-18 of the French Transport Code allows the master to refuse to deliver the goods and to require that they be placed in the hands of a third party until the corresponding contribution is paid, unless sufficient security is provided by the party entitled to the cargo. The provision is short, and every part of it counts.
First, the retention covers the goods and secures the contribution attributable to those goods. It is not a general lever for recovering other debts, and it is not a device for obtaining advance acceptance of the classification the owner has adopted. A retention exercised to force the consignee to give up any future challenge to the account falls outside the purpose of the text.
Second, the alternative to retention is not payment. The master may require consignment, which means the intervention of a third party holder, not a direct transfer into the owner’s hands. And the provision of sufficient security ends the retention as a matter of law: it is not a concession for the owner to grant, it is the effect the statute attaches to the security.
Third, the retention presupposes that a contribution is owed. It loses its basis where the classification as general average is itself excluded, for instance where all the interests engaged have been totally lost, a situation in which Article L. 5133-16 rules out any adjustment altogether, or where the goods fall within one of the cases that Article L. 5133-12 excludes from allowance. A consignee in either position does not argue about the amount of the security. He challenges the retention itself.
2. What sufficient security means, and what it does not
Sufficient is the only test the statute sets, and it is a relative one: the security must be sufficient measured against the foreseeable contribution, not against the owner’s comfort. Security calculated on the full invoice value of the cargo, or on a flat percentage applied without explanation, is not sufficient security. It is excessive security, and the excess is open to argument.
Two benchmarks make that argument concrete. The first lies in the structure of the calculation itself. Contribution is determined from the masses defined in Articles L. 5133-7 to L. 5133-10, and Article L. 5133-15 provides that the value of his contribution is, for each interest, the limit of his obligation. No party can be called upon beyond the contributory value of his own cargo, so security exceeding that value is disproportionate by construction.
The second benchmark is the creditor mass, that is, everything that will be allowed in general average. Where the owner demands security amounting to a third of the cargo value while the expenditure known at that stage is confined to a salvage operation and a call at a port of refuge, the gap between the demand and the foreseeable outcome is measurable. Asking for the provisional breakdown of the items the owner intends to claim is therefore the first useful step, and Article R. 5133-2 supports it: the burden of proving that a loss or expense is to be classified as general average lies on the party claiming it.
The York-Antwerp Rules point the same way. Rule E places the onus of proof on the party claiming in general average and requires that party to give written notice to the average adjuster of the loss or expense for which contribution is claimed, supported by evidence. Security demanded before that notice has been given rests on an assertion, not on an account.
3. Average bond, average guarantee and cash deposit
Practice usually combines three documents presented as a package, although they bind different people in different ways.
The average bond is signed by the cargo interest. It contains an undertaking to pay the contribution that will be assessed, an obligation to supply the values of the goods, and very often an acceptance of adjustment under the York-Antwerp Rules by the adjuster already appointed. That last point deserves attention: an average bond read too quickly can accept in one stroke the law of the adjustment, the person who will draw it up, and sometimes the forum competent to hear disputes about it.
The average guarantee is given by the cargo underwriter in favour of the shipowner. It does not replace the shipper’s undertaking, it is added to it. Its reach depends closely on the sum insured: where the goods were insured for less than their real value, the underwriter guarantees only up to what it covered, while the contribution is calculated on the real value by operation of Article L. 5133-11. The difference stays with the shipper, who generally discovers it very late.
The cash deposit is the third route and the heaviest. The York-Antwerp Rules regulate it in Rule XXII, which requires that sums collected be paid without delay into a special account in the name of the average adjuster and held separately, on trust. A deposit paid into the current account of the owner or its agent does not meet that requirement, and that is a perfectly arguable ground for refusal.
4. The shipowner’s privilege, and what it changes in the negotiation
Article L. 5133-19 gives the shipowner a preferential right for payment of the general average contributions owed to it. That security explains the firmness of security demands: an owner who releases cargo without a counterpart loses the asset over which its preference runs, and becomes an unsecured creditor of a consignee sometimes established on the other side of the world.
Understanding that logic changes how the discussion is conducted. The point is not to persuade the owner to give up a security, it is to offer an equivalent one that costs the cargo less. A bank guarantee or a first class underwriter’s letter, capped and given a reasonable expiry date, performs the same economic function as a prolonged retention, without immobilising perishable or bonded goods.
The preference also has limits of its own. It secures the contributions owed, meaning those that will result from the adjustment, not those the owner unilaterally considers due. Nor does it survive the extinction of the claim: the five year prescription of Article L. 5133-17, which runs from the date on which the adventure ended, carries away the security attached to it. Security whose duration extends well beyond that point deserves to be brought back to its proper measure.
5. Reservations worth writing before you sign
Refusing to sign exposes the cargo to consignment, and Article L. 5133-18 permits it. The practicable route is therefore almost never refusal. It is a signature within a framework. Four reservations are worth putting in writing, either in the document itself or in a concurrent letter to which it refers.
The first concerns the classification in principle. Signing to obtain release is not an acknowledgment that a general average act exists within the meaning of Article L. 5133-3, which requires an extraordinary sacrifice or expenditure decided by the master for the common and pressing safety. Saying so expressly prevents a later argument that acceptance was tacit.
The second concerns the amount. Security is given up to a stated cap, revisable downwards as soon as the provisional breakdown is disclosed, and it does not prejudge the contributory value that will finally be retained.
The third concerns the adjustment itself. Acceptance of the adjuster appointed by the owner, where the document contains it, should be reserved: disagreement on the adjustment opens the route of Article R. 5133-3, under which the most diligent party may have one or more court appointed average adjusters named by the president of the commercial court or of the judicial court of the last port of discharge.
The fourth concerns recourse. Article L. 5133-5 provides that the fault of a party to the adventure does not prevent the general average adjustment, but preserves recourse against the party at fault. A signature that waived that recourse would empty the case of its substance, and the corresponding reservation should be explicit.
6. What to do straight after release
Once the cargo is back, the file enters a long phase, often eighteen to thirty-six months, during which nothing appears to happen. The appearance is misleading: time limits are running and evidence is disappearing.
Three steps should be taken at once. The first is a request for the documents contemporaneous with the casualty. Article R. 5133-1 requires the master to enter in the log book, as soon as he is able, the date, time and place of the event, the reasons that determined his decision and the measures he ordered, and then to attest those facts within twenty-four hours of arrival at the first port. Those papers underpin the classification, and their absence is easier to establish when raised early.
The second is a survey of the condition of the goods on delivery, held jointly where the amount at stake justifies it. General average and particular average are settled differently, and Article L. 5133-2 leaves the latter with the owner of the damaged property, subject to recourse. Damage wrongly treated as general average is damage paid for twice.
The third is to watch the time bar for the claim against the carrier, which is not the general average time bar. Article L. 5422-18 bars the action against the carrier for loss or damage after one year, a period that may be extended by agreement made after the event, and it allows recourse actions three further months from the day the indemnified party was sued or settled the claim amicably. A general average file still open five years after the adventure may therefore long since have lost its most useful recourse.
7. Bonded goods, perishables and boxes standing idle
Retention under Article L. 5133-18 combines with constraints that are foreign to it and that, in practice, determine the real cost of the hold. Cargo discharged at a port of refuge is often placed under a suspensive customs regime whose own deadlines run regardless of the maritime dispute. Perishable goods deteriorate while the amount of the security is being argued. An immobilised container generates demurrage and storage charges which are not allowable in general average and will stay with whoever incurs them.
Those peripheral costs change the arithmetic of the negotiation. Spending three weeks arguing about security overstated by a hundred thousand euros makes no sense when the immobilisation costs more than that over the same period. The efficient sequence is to provide capped security quickly, with the written reservations described above, recover the goods, and then conduct the argument on quantum once the logistical pressure has eased. The reservations keep their effect, and the meter stops.
For perishable goods one further step is needed: have the condition of the cargo surveyed before any handling, jointly where the amount justifies it. The line between general average and particular average turns on that survey. Article L. 5133-4 confines allowance to loss of and damage to the property engaged in the adventure that is the direct consequence of the general average act. Deterioration caused only by the lengthening of the voyage, or by loss of power to a reefer unit during the call, does not meet that definition and belongs, depending on the facts, to the carrier’s liability.
Finally, goods sold to raise funds fall under a specific regime. Rule XX of the York-Antwerp Rules allows in general average the capital loss suffered by the owners of goods sold in order to raise funds to meet general average disbursements, together with the cost of insuring those disbursements. That item is legitimate, provided the sale genuinely had that purpose.
The firm has prepared a practical guide that reads an average bond clause by clause, sets out standard reservations, explains how the security is calculated and describes the procedure for challenging the adjustment. It is available on the page Download the General Average guide. How the firm works on these files is set out on the page general average lawyer, and the wider practice on the page maritime law.
Frequently asked questions
Can I get my cargo released without going through my underwriter?
Yes. Article L. 5133-18 of the French Transport Code requires sufficient security, without requiring that it come from an insurer. A bank guarantee, and in some files a cash deposit into a separate account complying with Rule XXII of the York-Antwerp Rules, serve the same purpose. Going through the cargo underwriter is a market convenience, not a legal condition, and it carries the drawback of capping the guarantee at the sum insured while the contribution is calculated on the real value.
What happens if I refuse to sign the average bond?
The master may require the goods to be placed in the hands of a third party, which the text expressly permits. The cargo is not confiscated, it is held at the expense of the file, and the dispute moves to whether the retention itself is justified. That route only makes sense where the classification as general average is seriously arguable, for instance where all the interests engaged were totally lost. In other cases a signature with written reservations gives better protection at lower cost.
The security I provided is too high, can I have it reduced?
Yes, and the point is often overlooked. Security is owed only up to the foreseeable contribution, and Article L. 5133-15 caps each interest’s obligation at the value of its own contribution. As soon as the provisional breakdown is disclosed, or the contributory value of the goods is established at the port of discharge under Article L. 5133-8, a request for reduction is worth making. Security left at a plainly excessive level ties up a credit line for years.
Can my cash deposit be kept in the shipowner’s account?
No, where the adjustment is subject to the York-Antwerp Rules. Rule XXII requires deposits to be paid without delay into a special account in the name of the average adjuster and held separately, on trust. Payment into the account of the owner, its agent or its broker does not satisfy that requirement. Asking for evidence that the account has been opened and on what terms is legitimate before any payment, and a refusal is itself a signal.
How long will the security stay in place?
Until the adjustment is issued, then until it is accepted or approved by the court. In practice eighteen to thirty-six months on a container ship casualty. Two outer limits apply: the five year prescription of Article L. 5133-17, running from the end of the adventure, and the contractual time bar in Rule XXIII of the York-Antwerp Rules, one year from the issue of the adjustment and in any event six years from the termination of the common maritime adventure. Open ended security should be traded for security with an expiry date.
On the same guide, on the account itself: General average contribution, security and adjustment, what to check before paying. On apportionment and recourse: General average and liability, who contributes and who to pursue.